Employment Law Newsletter

I. Notifications

1. Karnataka notifies Karnataka Compulsory Gratuity Insurance Rules, 2024

The Government of Karnataka vide a notification dated January 10, 2024, has notified the Karnataka Compulsory Gratuity Insurance Rules, 2024 ("Compulsory Gratuity Rules"), in exercise of powers conferred to it under sub-section (4) of section 4A of the Payment of Gratuity Act, 1972 ("Act"), making it mandatory for employers to procure an insurance policy to cover their gratuity liability. By notifying these rules, the state of Karnataka has become the second state after the state of Andhra Pradesh to codify a legal framework in relation to compulsory insurance for gratuity payment. Certain key changes introduced by the Compulsory Gratuity Rules are mentioned below:

• Applicability of the Gratuity Rules

As per the definition of the term "employer" provided under sub-rule 2(b) of the Compulsory Gratuity Rules, the said rules are applicable to employers, other than such employers operating under the control of the central government or the state government. A bare reading of rule 2(b) of the Compulsory Gratuity Rules read with section 3 of the Act provides that the said rules shall be applicable to private establishments where 10 or more employees are employed ("Eligible Employees"). This essentially means that the Compulsory Gratuity Rules shall be applicable to private establishments and such private establishments would be required to obtain a valid insurance policy for their liability towards payment of gratuity to Eligible Employees as per the Act. This insurance policy can be obtained from the following entities as per the Compulsory Gratuity Rules: (a) Life Insurance Corporation of India ("LIC"), (b) any insurance company incorporated under the provisions of the Insurance Act, 1938, Companies Act, 2013, and (c) the Insurance Development and Regulatory Authority of India,1999, (collectively referred to as "Insurance Providers").

• Compliance requirements

The table below encapsulates certain specific situations with respect to certain employers, the compliance requirements arising out of the Compulsory Gratuity Rules being notified, and the relevant timelines in relation thereto:

2. Introduction of the Maharashtra Labour Welfare Fund (Amendment) Act 2024

Vide a notification dated March 08, 2024, the government of Maharashtra has introduced the Maharashtra Labour Welfare Amendment Act, 2024 ("Maharashtra LWF Amendment Act 2024").

Revision of rates of contribution payable by the employer and the employee

The Maharashtra LWF Amendment Act, 2024, seeks to substitute sub-section (2) of section 6BB of the Maharashtra LWF Act. The substituted sub-section (2) of section 6BB provides for revised rates of contribution by the employer as well as the employee. For an employee who is on the register of establishment, the amount to be paid shall be INR 25, to be paid every six months, and for an employer, the amount would be thrice the amount paid by an employee, payable every six months.

3. POSH compliance checklist issued for companies and non-governmental organizations operating out of Gurugram, Haryana

The additional deputy commissioner, Gurugram, Haryana, has recently issued a directive containing a check list in relation to compliance requirements to be ensured as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 ("POSH Act"), by companies, and non-governmental organisation, amongst other entities ("Directive"). The Directive mandates submission of the annual report by internal complaints committees ("ICC") constituted by the aforementioned entities as per the prescribed format under the POSH Act.

The Directive essentially provides for a questionnaire to be filled and certain details to be submitted by the aforementioned entities. The questionnaire seeks to collect the following information:

1. If at all a POSH policy has been formulated constituting an ICC, if yes, then the reference number of such policy was sought to be provided;
2. If at all in the employment contracts entered by the aforementioned entities, or in any of the service rules/policies, or in any of the standing orders issued by the aforementioned entities, the term "sexual harassment" is defined as a kind of misconduct in line with the definition of "sexual harassment" provided under the POSH Act;
3. If at all the aforementioned entities have displayed at conspicuous places sufficient notices informing employees about the stance of the organisation on sexual harassment and the consequence of any such offence in relation thereto;
4. If at the entities have tried to communicate in the regional languages the constitution and formation of the ICC, to its employee. The Directive mandates a copy of such notice to be reproduced;
5. If at all the entities have conducted workshops in relation to anti-sexual harassment awareness for the calendar year 2023. If yes, then the aforementioned entities are required to provide details of virtual as well as physical workshops conducted in the given calendar year;
6. Have all the employees including contractual employees (if any), are covered under the awareness programmes conducted by these entities;
7. Do the organisations have a mechanism in place to assist employees to file criminal complaint under the Indian Penal Code, 1860;
8. The Directive mandates ICC to be constituted at every administrative unit/office if such administrative units and offices are at various sub-divisional level. It further provides details to be provided in relation to constitution of ICC at such administrative units/offices. If at all any orientation programs have been conducted by the entities in relation to this, if at all the necessary facilities were provided to the ICC for dealing with sexual harassment proceedings;
9. Details of pending and disposed sexual harassment cases as provided in the annual report as per Section 22 of the POSH Act; and
10. Statement issued by Companies in relation to their compliance with the POSH Act as required under the Companies (Accounts) Rules, 2014.

II. Judgments

1. Mahanadi Coalfields Ltd. vs. Brajrajnagar Coal Mines Workers' Union

a. Background

In this case, the Supreme Court ("SC"), vide, its judgment dated April 12,2024, upheld the right of regularisation of workmen engaged in work which is regular and perennial in nature.

b. Facts

The facts of the case relate to workmen employed by Mahanadi Coalfields Ltd. ("Appellant"), , through a contractor for transporting crushed coal from 1984 to 1994. The Braj Rajnagar Coal Mines Workers' Union ("Respondent") advocated for the classification of these workmen as permanent workmen before the Assistant Labour Commissioner ("ALC"). Following the representation received from the Respondent, the ALC sent a notice for conciliation to the Respondent and this process before the ALC, culminated into a settlement and on such basis, an award being passed under Rule 58 of the Industrial Disputes (Central Rules), 1957. This settlement award was passed in relation to 19 workers, regularizing their employment, however, about 13 were left out of the purview of the settlement award. Considering that the settlement was confined to only 19 workmen, the Central Government referred the entire dispute to the Industrial Disputes Tribunal ("IDT") under Section 10(2A)(1)(d) of the Industrial Disputes Act, 1947. The IDT vide its' order directed regularization of the service of the remaining 13 workmen. Considering nature of work of the 13 workmen, the IDT held that the nature of work undertaken by such workmen involves, amongst others, work like removing spillages in the railway siding, below the bunker, etc., which is perennial in nature.

Aggrieved by this order of the IDT, the Appellant challenged this order before the Orissa High Court ("OHC"), which was dismissed by OHC ("Impugned Order"). Aggrieved by the Impugned Order, the Appellant approached the SC.

c. Analysis and decision

The SC in the matter, elucidated on the binding nature of settlements under the Industrial Disputes Act, 1947, reiterating that such settlements do not abrogate the jurisdiction of Industrial Tribunals to adjudicate disputes comprehensively.

Further, emphasizing the need to scrutinize the nature of work undertaken by the workmen the SC underscored the impermissibility of arbitrarily denying regularization, affirming the worker's entitlement to equitable treatment, and safeguarding the workmen against wrongful deprivation of employment.

Furthermore, the Supreme Court clarified its constitutional jurisdiction, validating the IDT's findings and upholding the workers' rights to regularization and backwages, retroactive to the IDT's decision.

2. Mphasis Limited vs. Sri Ashok S. Narayanpur

a. Background

In this case, Karnataka High Court ("KHC"), vide its judgment dated January 25, 2024, analysed the nature of job of a project manager working in an IT company and decided on the question of whether such individual would qualify as a workman or an employee in view of the Industrial Disputes Act, 1947 ("IDA").

b. Facts

This case dealt with a writ petition being filed by Mphasis Limited, a software company ("Petitioner") under Articles 226 and 227 of the Constitution of India, against one of its ex-employee, ("Respondent"), seeking to set aside an award passed by the Principal Labour Court, Bangalore ("PLC Bangalore") and for dismissal of a government order passed, in relation to the same matter.

In this case, the Respondent joined the Petitioner as a software trainee and was subsequently promoted to higher designations, however due to personal reasons, the Respondent tendered his resignation, which was also accepted by the Petitioner and the Respondent was relived, and all dues in relation to the Respondent were cleared by the Petitioner.

Later, the Respondent approached the Assistant Labour Commissioner ("ALC") seeking reemployment. The matter was referred to the PLC, by way of reference, as per section 10(1)(c) and 10(1)(d) of the IDA. The PLC held that the Respondent would fall under the definition of workmen as defined section 2(s) of IDA, since the Respondent was a project lead and was managing 4 (four) employees under him and further held that refusing employment to the Respondent would not be justifiable and directed reinstatement of the Respondent to his original post. The PLC however denied claims of the Respondent in relation to backwages and compensation. Aggrieved by this decision of PLC, the Petitioned filed approached the KHC by filing the aforementioned writ petition.

The limited question before the KHC, in this case was, whether the nature of duties performed by the Respondent would fall within the purview of definition of the term "workmen" as provided under section 2(s) of the IDA.

c. Analysis and decision

KHC analysed the definition of workmen provided under section 2(s) of IDA, especially with reference to the various criteria laid down under the said section. One of the criterias laid down in the said section is if the nature of work being performed by the employee is skilled work, technical work, operational work, or supervisory work.

The KHC also analysed the definition of workmen in view of judicial precedents pertaining to this question and held that the definition laid down under section 2(s) of IDA is required to be interpreted strictly, if at all an individual would have to be, considered to be a workman as per section 2(s) of IDA. KHC affirmed the view that this definition has to be interpreted strictly. Further, it held that if the legislative intent had been to take into consideration those employees who would not fall under the seven categories laid down under section 2(s) of IDA, then there would not have been the requirement to particularly lay down those seven categories. In view of the evidence presented before it, KHC held that the Respondent would not be a workmen as he was not engaged in any of the seven categories laid down under the aforementioned provision. Further, KHC held that even if the incidental nature of his job involved some amount of supervisory work, the primary nature of his work to be essentially "managerial" in nature and not manual, unskilled, or technical. In view of this, the writ petition was allowed, and the order of PLC was set aside.

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